In recent years the Securities and Exchange Commission, commonly known as the SEC, has been involved in a number of highprofile suits that have attracted a good deal of media attention. Among those prosecuted by the Commission are hedge fund billionaire and Galleon Group founder Raj Rajaratnam,1 investment/Ponzi - scheme guru Bernie Madoff,2 television host and magazine publisher Martha Stewart,3 and colorful Dallas Mavericks owner Mark Cuban.4 Although such notable suits may simply be the SECs attempt to justify its own existence and role in the market it polices in light of the financial disasters of the past decade, these cases do raise some significant questions regarding the amount of power delegated to the Commission by Congress.5 Specifically, what exactly is the scope of the SECs authority, and is there any limit on its ability to prosecute some of the most powerful and prominent people in the country?

While the SEC seems to be engaged in some muscle-flexing with regard to whom it chooses to prosecute, the Commission has also attempted to broaden the scope of its statutory power, especially with regard to the doctrine of insider trading.6 Rule 10b-5 - the provision utilized to prosecute inside traders - has experienced expansive growth since its creation, developing from a mere statutory catchall provision in the securities laws to one of the SECs chief weapons in combating insider trading and other fraudulent actions in the securities markets.7 In fact, the liberal expansion of Rule 10b-5 from its humble beginnings has been so vast that it led Chief Justice Rehnquist to remark that the Rule is "a judicial oak which has grown from little more than a legislative acorn."8

Despite the significant growth that Rule 10b- 5 has undergone since its enactment, the Supreme Court has always carefully limited the Rule to its statutory roots of prohibiting deceptive and manipulative conduct in the securities markets.9 Traditionally, to be liable for insider trading, the trader had to owe a fiduciary duty to the counterparty to the trade, or have a similar relationship of trust and confidence with him. …